06/16/2013

Careless Beneficiary Designation Can Be Estate Planning Kryptonite

We first shared this story back in 2011. Nothing has changed much since then as far as the need to be careful when designating beneficiaries. Please read the article then give us a call.

What
is the quickest way to un-do an otherwise carefully planned estate?

Open
a bank account, brokerage or retirement account.

Why?
Because the beneficiary designations on these accounts override your will. Yes,
it’s true – the beneficiary designation is the estate planning trump card. And
many an estate plan has come undone because of carelessly named beneficiaries.

“People don’t
realize the importance of this,” says Martin Shenkman, an estate planning
lawyer in Paramus, NJ. A carelessly named beneficiary on a financial account
can cause a loved one to be disinherited, a disabled child to lose government
benefits, and heirs to be slapped with a big tax bill.

The Journal also offers a
few tips to protect you from this type of estate plan destruction, to include:

Know what kinds
of accounts have beneficiary designations. Did you know that U.S. Savings
bonds have a beneficiary form? Other accounts for which you may have named a
beneficiary include retirement accounts, life insurance policies, bank
accounts, certificates of deposit, stocks, bonds and mutual funds.

Review your
beneficiary designations regularly and certainly after any life-changing
event such as a marriage, divorce, birth or death of a loved one. Also,
job-changers and retirees take note: Beneficiary designations on retirement
plans don’t carry over when you roll a 401(k) to a new employer’s plan or to an
IRA, or when you convert a regular IRA to a Roth IRA.

At
Idaho Estate Planning we educate our clients on the proper procedures for
naming beneficiaries. Our Life Plan™ Members also participate in a yearly
review of the assets contained in their estate plan and any changes made
through the previous year. If you have been considering putting your estate
plan together, we have the experience and expertise to help you maintain your
options and protect yourself as well as your loved ones now and into the
future. The best time to plan is always now! Remember, good
planning is no accident!